What you can learn from Taylor Swift rejecting FTX’s $100 million endorsement deal

Angry victims of the FTX scam are seeking redress from the celebrities who staged the botched exchange, in a lawsuit that names Larry David, Tom Brady and Shaquille O’Neill, among others. One name not on that list is Taylor Swift, who was offered a reported $100 million sponsorship deal with the offshore crypto exchange — but avoided embarrassment and potential legal fallout by showing some basic skepticism.

Swift reportedly asked FTX representatives: “Can you tell me that these [listed assets] are not unregistered securities?” during the negotiations, which ultimately failed. That’s according to Adam Moskowitz, the plaintiff’s attorney in the FTX approval lawsuit, speaking with The Block’s Frank Chaparro. Moskowitz describes learning about the incident in the discovery phase of the suit, and I haven’t seen confirmation from Taylor Swift’s camp.

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But even though it’s a bit of a so-so story, there is a wealth of wisdom in this little parable. It wouldn’t be the first time Swift proved herself to be a brilliant and sharp-elbowed businesswoman at the peak of her musical talent – ​​for example, having muscled her way out of a heavy publishing deal.

How, then, could the question of her securities laws, largely unrelated to the risk that ultimately manifested, have caused Swift to shy away from entering into business with FTX? I’m speculating here, but a likely scenario is that she or her people were not happy with the way FTX handled this and other issues. For example, perhaps Bankman-Fried or his representatives were confused or uncoordinated or defensive—all helpful signs of an organization that may be in deeper trouble. (Or maybe the Swift camp didn’t appreciate FTX’s boy wonder playing “League of Legends” during their meeting.)

Despite Moskowitz’s second-hand characterization, we can’t be sure that’s how it actually went down. The negotiations between FTX and Swift were first reported back in December by the Financial Times. The deal would have given Swift $100 million to place FTX branding at concerts. However, according to FT’s sources, there was skepticism about the deal within FTX due to its astronomical price tag (in comparison, FTX paid $135 million for naming rights to the Miami Heat stadium).

But taken at face value, the lesson of Moskowitz’s story is that you may not need to be up to speed on every single long-tail risk when you’re facing everything you’re investing in. What Swift got right wasn’t so much asking a specific question about the law or securities – on the whole, it asked challenging and critical questions.

A really smart investor will not be entirely focused on the content of the answers to difficult questions, but also on the way a question is addressed. Whether you’re able to do it face-to-face as Swift allegedly did, or by turning a keen eye to a company’s public communications, it’s a fundamental and crucial evaluation tool in business and investing at all levels.

At least in my mind-palace version of events, Taylor Swift smelled a rat in her answers to questions about securities laws. By running in the other direction, she avoided disaster.